GBP strong vs USD
Sterling managed to climb to above 1.60 against the USD this morning based on the inflation figures in the UK which came in at 3.7%, well above the target of 2% and the largest month on month rise since records began. This will put more pressure on the MPC to start looking at raising interest rates in the UK which is the usual cure for high inflation.
Yesterday there was a meeting of euro area finance ministers who did not say they were going to increase the size of the euro bailout fund which is what some were hoping for and will cause even more downward pressure on the Euro in the short term. This morning’s ZEW index in Germany should offer a little guidance but the euro is still very vulnerable so negative market sentiment.